The simple Keynesian model assumes that
A. gross private domestic investment exceeds net investment by the capital consumption allowance.
B. aggregate demand will always equal aggregate supply.
C. there will never be any excess capacity in the short run.
D. prices, especially the price of wages, are "sticky downward."
Answer: D
You might also like to view...
Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting downward C. Aggregate demand shifting rightward D. Aggregate demand shifting leftward
The opportunity cost of holding money is measured by the:
a. interest rate b. liquidity lost by holding money. c. money supply curve. d. inflation rate. e. cost of cashing in financial assets.
An efficient allocation of resources exists if
A. one group of people can get more of the things they want without someone else having to give up anything. B. no one can get more of the things he or she wants without someone else having to give up something. C. the economy operates at any point under the production possibilities frontier. D. the economy is operating at any point above the production possibilities frontier.
If the Fed wants to decrease the money supply, it can:
A. Increase the money multiplier. B. Decrease the discount rate. C. Sell government bonds. D. Decrease the minimum reserve ratio.